Fraud? Maybe Not, But Some Questionable Expenses Indeed

Corporate expensing — in pursuit of the top line — can be nothing if not ambitious. Perhaps even fanciful, and oftentimes, expensive and questionable.

Consider the findings spotlighted in CNBC, as Certify, a travel and expense reporting app, took note of the more unusual expensing attempts, both accepted or rejected. The findings came from a survey of 2,000 individuals between 2013 to 2018.

In one case, a company gave the thumbs up to an $8,000 designer watch, chalked up to “customer appreciation.” In another example, a $6,500 expense tied to a helicopter ride — that an employee claimed had to be taken to “make it to a client meeting” — was denied. The $10,000 expensed for a hotel repair bill tied to a hole punched in the wall and a rebooking fee for a flight missed while in jail were both denied. The employee who tried to charge $85 for a separate hotel room for garlic samples? Well, that did not pass the smell test and got denied.

The bizarre notions and expensing call to mind recent findings, per a survey released this week from AppZen, showing that this vertical — which is comprised, at least in part, by accountants and financial advisors, among others — has expenses rejected most often upon their submission. As reported last week in CPA Practice Advisor, per AppZen, roughly 30 percent of expenses filed by employees in the professional services space get flagged when scrutinized against corporate policies.

Amid the mix, philanthropy and building material firms saw close to none of their submitted expense reports flagged and rejected. AppZen said there is no finding that certain verticals are more or less prone to expense fraud.

To help combat that fraud, and as spotlighted in this space earlier in the month, technology can help with expense management in uncovering whether expenses are on the right side of policy, mistaken or downright fraudulent. As interviewed by PYMNTS, Karim Jouini, CEO of France-based Expensya, said data is of critical importance. As found in reports by The Economist Intelligence Unit, more than 60 percent of CFOs and other financial managers across the U.S., the U.K., France and Germany lack visibility into expenses.

In examples of the ill-famed business email compromise (BEC) scams that seem to make frequent headlines, $1 million was transferred from the Save the Children Foundation. The company, as noted by Infosecurity, disclosed the theft in a filing with the IRS. The fraudster sent emails from an employee’s account that had been accessed, and convinced the foundation to send money for solar panels in Pakistan. The FBI noted that as much as $12.5 billion has been stolen via BEC from October 2013 to May 2018.

In one individual case of fraud, relayed on Tucscon.com, Seth Nichols has been ordered to pay $3 million in restitution, and sentenced to five years in federal prison, for doctoring financial records tied to a cattle stockyard. Last year, the owners found that $1.3 million was missing and that the company’s corporate card had been drawn down by $2 million. Nichols also used the company’s transaction systems to buy cattle and sell them elsewhere, while electing to not reimburse the stockyard. He faked financial records tied to bank balances and credit lines as well.